RESEARCH REPORT

In brief

In brief

  • Accenture’s research reveals new insights into how European chemical companies can lead and benefit from the shift to a circular economy.
  • Faced with growing pressure, our report explores how chemical companies can help to address society’s environmental and sustainability challenges.
  • Chemical companies must embrace the disruptive change reshaping the industry. Accenture shares seven steps to start winning in a circular economy.


Over the past two years, the circular economy has drastically changed the chemical industry. With more end-consumers pushing for sustainability, chemical companies are now witnessing a substantial pull from downstream value chains for circular products and processes. But the move to circular threatens to disrupt existing value chains and profit pools.

Chemical companies now have a new role to play in the circular economy, and the impact of their efforts will be felt across more than just their industry.

What is the circular economy?

The circular economy seeks to replace today’s linear “take-make-dispose” approach to resources with one where materials are constantly cycled back through the value chain for re-use, resulting in less energy and resource consumption. This can be achieved in many ways, including by creating circular operations, developing circular products and services, and increasing collaboration across product life cycles and value chains.

The accelerating shift to circularity

Evolving consumer attitudes are one of the key factors driving the growing importance of the circular economy. People now want to use more sustainable products that are recycled and bio-based.

Meanwhile, brand owners are watching evolving consumer preferences on circularity and taking a leading position in making voluntary commitments to circular economy goals. Investors are increasingly likely to factor in a company’s impact on society and the environment to determine its worth. The EU has committed to achieving a 45 percent reduction in greenhouse gas emissions by 2030 (compared to 1990 levels). And all of these changes are taking place against a backdrop of increasing regulation and new players entering the market to address the opportunities provided by new technologies.

72%

of consumers said they bought more environmentally friendly products in the last five years.

81%

expect to buy more environmentally friendly products in the next five years.

A single industry cannot achieve circularity alone. Thriving in the circular economy will depend on chemical companies collaborating between value-chain segments to keep materials in the economy for longer, and to close various loops that cycle materials back through the value chain.

Accenture estimates that approximately two-thirds of chemical product volumes sold to downstream industries could be circulated through one loop or the other. To close these loops, chemical companies need to focus on several activities.

Consumer goods companies are shifting toward 100% reusable, recyclable or compostable plastic packaging.

Closing the circular economy loops

1. Materials flow

End-of-life materials as alternative sources of feedstock

2. Infrastructure transition

Infrastructure transition to handle the material flows

3. Reverse supply chain

Ensure constant quality and quantity in the supply of waste streams

4. Evolution of technologies

Machine learning-based sorting, digital product passports and other material technology will be key

5. Break-even economics

Key value drivers of break-even cases include revenue potential and cost drivers from collection and waste purchase to cleaning and recycling

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Circularity creates a range of new opportunities for chemical companies.

Moving into circular: options for chemical companies

In the EU, about 51.2 million tons of plastics were consumed in 2018, but only 29.1 million tons of plastic waste were collected.1 In the absence of any disruptions, Accenture expects plastics consumption to grow to 60.5 million tons by 2030. And taking into account all chemical products—not just plastics—and integrating numerous assumptions, our Accenture model projects consumption growing from 139 million tons in 2018 to 180 million tons in 2030.

Designing for circularity

The redesign of products for circularity will need to be far-reaching and widespread, otherwise massive investments will be required, inefficiencies will increase due to the large portion of waste that cannot be handled, and a costly system that consumes large amounts of energy will emerge.

Occupying sweet spots

Circular value chains will help brand owners meet their commitments and provide an opportunity for chemical producers to go beyond the traditional business models of simply making and selling molecules, and instead participate in more portions of the value chain, offering considerable growth potential. The race to occupy “sweet spots” in the future value chains is already on.

Increasing collaboration across the value chain

For chemical companies, it will be important to make value chain collaboration part of a systematic overall circularity strategy, and to enter strategic partnerships sooner rather than later.

What’s next?

With chemical companies now seeing the importance of the circular economy, they can start taking these seven practical steps to move forward.

Re-evaluate the product portfolio

Re-examine the target product portfolio for expected changes in demand patterns.

Shift to circular assets

Shift capital investments from assets designed for linear, virgin materials to new, circularity-focused assets.

Develop circular capabilities

Systematically develop circular capabilities across the entire organization.

Reorganize for circularity

Legacy organizations must consider setting up separate new companies focused on circular growth to accelerate time-to-market for circular solutions.

Seize opportunities

Capture opportunities from brand owners’ voluntary commitments and build cross-value-chain pilots rapidly.

Redefine and test business models

Pressure-test and redefine existing business models, business by business.

Build trust

Build consumer trust through proactive circularity in operations and develop communication strategies to boost public confidence and own the narrative.

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"We welcome Accenture’s study as a valuable input to the necessary dialogue between all stakeholders so that Europe can truly become a circular hub with the chemical industry at its heart."

— Marco Mensink, Director General, Cefic

1 Source: Plasticseurope.org, 16 July 2019.

Rachael Bartels​

​Senior Managing Director – Chemicals & Natural Resources​, Accenture


Dr. Bernd Elser

Managing Director – Accenture Strategy, Chemicals & Natural Resources


Michael Ulbrich

Managing Director – Accenture Strategy, Chemicals & Natural Resources

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